Thomas Barkin, president of the Federal Reserve Bank of Richmond, stated that the current interest rate level between 4.25% and 4.5% is appropriate for dealing with current economic conditions, noting that monetary policy will remain flexible in line with economic developments.
Barkin explained that increased consumer shopping rates could mitigate the impact of tariffs on inflation, but at the same time, it could lead to reduced demand and higher unemployment rates if it continues for an extended period.
He added that household spending remains strong despite challenges, and that economic uncertainty has begun to recede thanks to factors such as the new tax law, greater clarity in immigration policies, and the completion of trade agreements initiated by the Trump administration.
He pointed out that the future of inflation depends on consumer reactions to any price pressures, noting that the rush to take advantage of deals or stockpiling goods before tariffs – such as buying iPhones – could lessen the anticipated inflationary pressure.
Barkin warned that any sharp decline in spending could pressure corporate profits and affect employment, but he clarified that the shortage of labor due to tightening immigration policies and increased retirements could lead companies to retain their employees despite the pressures.
In conclusion, Barkin expressed optimism about the possibility of avoiding a significant rise in unemployment, confirming that the Federal Reserve is closely monitoring the slowdown in job growth, and that the current monetary policy provides the economy with enough flexibility to face any potential challenges.
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